Michigan Legislators Must Solve Their Overspending Crisis with Budget Cuts

(Editor's note: The following is an edited version of testimony given by Kenneth M. Braun, policy analyst, to the Michigan House Appropriations Committee on May 20, 2009.)

Good afternoon Mr. Chairman and members of the committee.

Thank you so much for the invitation to testify. I greatly appreciate that you are the first Appropriations Committee in either chamber of the Legislature to ask for my advice. I'd like to clarify before I begin that, while my remarks have been tailored to the work of this body, a comparable statement could and should also be directed at the Senate. I mention this because what I am about to say to you may not win me an invitation to speak in the Appropriations Room on the other side of the building anytime soon.

I have provided our latest list of $2.2 billion in cost saving suggestions, compiled by our senior legislative analyst, Jack McHugh. Implementing any or all of these items — in the words of the report's author — would not be "devastating" to the state or to its "vulnerable" populations.

But the common problem with implementing each of them is that they cut against the way the political establishment in Lansing has been doing business for decades. The letter inviting me to this gathering asked that I come prepared to "enumerate factors that have contributed to the structural deficit." As such, I am not going to address my remarks to our specific spending proposals - which you can all read for yourselves - and will instead concentrate on how you got here and how you can get out.

State government's spending disorder is a bi-partisan problem. Getting over it will require politicians in both parties deciding to sacrifice hundreds of millions in spending that is dear to them. Each of you will probably find a cut to hate on that list that I provided.

Michigan spends more per prisoner than the national average and locks up more people than the national average. It's one of those things where if there are two different overspending options, Michigan has selected option C: All of the above.

Two summers ago, Gov. Jennifer Granholm suggested just tapping the brakes a little bit on the runaway train of prison costs and saving $92 million per year by adjusting the sentences of some non-violent offenders. On behalf of my organization, I praised the governor for "thinking outside the bars" about prison spending, and encouraged the Republican lawmakers to work with her. Some of the state's business organizations — not normally recognized as bleeding-heart, soft-on-crime liberals — agreed.

And that's just the beginning - a modest estimate of the cost solutions available. On the high side, the Citizen's Research Council has compared our corrections spending to neighboring states and thinks that our choices have forced us to spend as much as $500 million more than we need to each year.

And yet from the GOP side of the aisle there was mostly derision. One current Republican member of this very committee publicly stated: "I've not seen that there is a case to be made for significant changes in our sentencing guidelines."

As a result of attitudes such as this, we got two more years without saving this money.

Likewise, you will find on our list of reforms a suggestion that this Legislature provide cost containment in the K-12 budget by requiring local school districts to privatize their non-instructional services such as busing, food and janitors. Given the significant cost savings now being realized by the growing number of districts that are outsourcing these services, we modestly project that if every district did this it would save $100 million of the $2.2 billion in suggestions in that document before you. However, that's a low-ball figure in comparison to the numbers that our annual survey on this topic has unearthed. The savings could easily be twice as much.

And what is the impediment to this reform?  

In 2006, one district attempting to hire a private bus contractor had a local state lawmaker demagogue the situation by claiming that illegal immigrants would soon be driving school buses. I often wonder if there's any issue facing Michigan where our politicians will not try scapegoat a supposedly sinister foreigner or other "outsider."

The lawmaker who made that statement is a Democrat, and he also currently serves on this committee.

So, in just these two recent cases, lawmakers from both parties working in this very room have actively helped blast multi-hundred million dollar holes in the budget. And there are many other examples. Often the most expensive involve massive bi-partisan support. The 21st Century Jobs Fund and the Hollywood film tax credits are just two other eight- or nine-figure budget swallowing monsters created in the recent past and voted for by many if not most of the lawmakers still serving in this building.

And so, you invite me here to — quote — "enumerate the factors that have contributed to the structural deficit."

Well, here's the biggest factor: You all don't look in the mirror enough.

If you really are serious about right-sizing this state's government, then each of you must eagerly accept and stop trying to thwart the reforms that touch your own favorite spending priorities. If you don't do it, nobody else will. Accepting tough decisions for yourselves, rather than trying to force them on one another, is the job that you're supposed to be doing here. And you need to be doing a lot of it because it's the only way out of this problem.

Here's a new idea for you: Why not try and overachieve for a change? Come together and agree to make more cuts than you need and make a concerted effort to put a lot of money away in the rainy day fund. Or even just give it back to the people who earned it.

It's not such a radical idea outside of the ZIP code that we're standing on. Most of those people who earned the money in the first place do this every day.

I'll end with one other recent budget story that involves a member of this committee. Last year, the House passed a preliminary version of a school aid budget that deliberately proposed to spend $32.2 million more than the most recent estimate of the revenue available. It is hard to imagine a more irresponsible action than appropriating money when you know you don't have it, yet a bi-partisan majority of House lawmakers later voted in favor of doing just that.

Rep. Chuck Moss (R-Birmingham) asked two questions regarding this action:

"Are we nuts?"

And...

"How in heavens do we propose to pay for all this stuff?"

I would propose to you that as long as there is such an obvious answer to his first question, you will never find an answer to the second one.

Thank you for your time and your invitation. I'll be happy to take any questions.

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Kenneth M. Braun is a fiscal policy analyst and director of the "Show Michigan the Money" project at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.